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The Justice Department is pressuring national tax-preparer Jackson Hewitt to close down 125 of its tax preparation stores.  Allegedly, these stores stole $70 million from the IRS. 

Each store is owned, or partially owned, by the same franchisor and are spread across four separate states.

The tax stores and its owner are accused of using fake W-2s, bogus deductions and other fraudulent claims to reduce the tax liabilities of its clients, and also of paying kickbacks to store managers and employees.

I am highlighting this story because income tax preparation is similar to mortgage planning in several ways:

1. It's not One Size Fits All -- each individual needs individual counseling
2. It's a crucial part of a person's short- and long-term financial plans
3. There are plenty of low-cost providers in the marketplace

I am not picking on Jackson Hewitt -- these stores targeted by the DOJ represent just 2% of the corporation's total franchises -- but this is a terrific example of how fraud permeates every level of every business, no matter how big or small.

There will be huge penalties for the franchise owner, but the penalties will be worse for the individuals whose tax returns will need to be amended.  Corporations have insurance and can declare bankruptcy. 

Tax penalties and liens can hurt an individual forever.

At this time of year, I get a big kick out of watching tax stores pop-up, and then fade away beginning April 15.  It creaes the notion that taxes are a seasonal thing when we all know that the reverse is true.

Taxes and tax planning is an all-year thing. 

If your accountant is a temporary employee who only works from January 1 - April 15, that should tell you something.

Look.  You are going to pay for your accounting, one way or another so make the choice to make taxes a bigger part of your plan.  It's best to work with a trusted accountant that can help you plan for the long-term and fit your tax strategy into your overall financial plan.

Need a referral?  Just ask.

Source
Jackson Hewitt accused of tax fraud in IL., 3 other states
Crain's Chicago Business, April 4, 2007
http://chicagobusiness.com/cgi-bin/news.pl?rssFeed=news&id=24475

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.